$AFRM put buyers quadruple their money

$AFRM put buyers quadruple their money


Option traders are collecting big gains on downside positions in Affirm Holdings Inc (AFRM) today.

On Mar. 7Market Rebellion’s Unusual Option Activity Service found that 3,700 Weekly $13.50 puts, expiring tomorrow, were bought for $0.77 to $0.80 as part of a bearish roll with shares at $13.21. This was clearly fresh buying, as the open interest in the contract before the activity appeared was just 662.

Those puts have traded up to $3.39 so far this session, over 4 times their purchase prices. The stock declined 23.24% in the same time period, a large move but nowhere near that of its options on a relative basis.

Long puts lock in the price where a stock can be sold no matter how far it might drop, gaining value in a selloff with the potential for significant leverage. The contracts can be purchased either as an outright bearish bet or a hedge on a long-stock position.

AFRM was last down 8.53% at $10.34.

Ready to start trading? Try Unusual Option Activity Essential. Learn how you can follow the “smart money” with a fresh UOA trade idea each week – including technical levels so that you know how to manage each trade!

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